Investment management company Cove Street Capital recently released its “Small Cap Value Fund” second quarter 2024 investor letter. A copy of the letter can be downloaded here. In the second quarter, the fund returned -10.77% (net of fees) compared to -3.28% for the Russell 2000 Index and -3.64% for the Russell 2000 Value Index. For the first half of 2024, the S&P 500 is up 15%. Its biggest component, Nvidia, has increased by 150% over that time. In addition, you can check the top 5 holdings of the fund to know its best picks in 2024.
Cove Street Capital Small Cap Value Fund highlighted stocks like Red Violet, Inc. (NASDAQ:RDVT), in the second quarter 2024 investor letter. Red Violet, Inc. (NASDAQ:RDVT) is a software and services company. The one-month return of Red Violet, Inc. (NASDAQ:RDVT) was 10.11%, and its shares gained 20.70% of their value over the last 52 weeks. On July 10, 2024, Red Violet, Inc. (NASDAQ:RDVT) stock closed at $25.48 per share with a market capitalization of $349.853 million.
Cove Street Capital Small Cap Value Fund stated the following regarding Red Violet, Inc. (NASDAQ:RDVT) in its Q2 2024 investor letter:
“Lastly, we added a position in another data company in Red Violet, Inc. (NASDAQ:RDVT) in the quarter. Unlike Clarivate, which provides a suite of niche, high value services to a few particular industries, Red Violet is focused on being an “arms dealer” of personal identity data that powers other data service company solutions. They do this for a variety of end-markets: financial/corporate (AML, KYC), real estate, collections, investigative, retail, etc. The Red Violet management team built two of the other three players in the industry and have “gotten the gang back together,” only this time they have built a cloud-first architecture and have high inside ownership. We have followed the small (~$300m market cap), thinly traded company for a long time and had an opportunity to take a meaningful stake via secondary by a charitable foundation shareholder at a cost just under $19. Growing 20% as of 1Q24, Red Violet seeks to maintain its high growth rate via efforts to move up-market towards enterprise customers as well as reaping gains from recently entered verticals such as government, legal, and marketing.”
A technician inserting a credit card into a point-of-sale machine for identity authentication.
Red Violet, Inc. (NASDAQ:RDVT) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 9 hedge fund portfolios held Red Violet, Inc. (NASDAQ:RDVT) at the end of the first quarter which was 6 in the previous quarter. Red Violet, Inc. (NASDAQ:RDVT) generated total revenue of $17.5 million in the first quarter, a 20% increase over the prior year. While we acknowledge the potential of Red Violet, Inc. (NASDAQ:RDVT) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
We discussed Red Violet, Inc. (NASDAQ:RDVT) in another article and shared Cove Street Capital’s views on the company in the previous quarter. In addition, please check out our hedge fund investor letters Q2 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
